Correlation Between Air Lease and Catheter Precision

Can any of the company-specific risk be diversified away by investing in both Air Lease and Catheter Precision at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Air Lease and Catheter Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Air Lease and Catheter Precision, you can compare the effects of market volatilities on Air Lease and Catheter Precision and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Air Lease with a short position of Catheter Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and Catheter Precision.

Diversification Opportunities for Air Lease and Catheter Precision

-0.68

Correlation Coefficient

Air Lease  Catheter Precision

Excellent diversification

The 3 months correlation between Air and Catheter is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Catheter Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catheter Precision and Air Lease is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Air Lease are associated (or correlated) with Catheter Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catheter Precision has no effect on the direction of Air Lease i.e., Air Lease and Catheter Precision go up and down completely randomly.

Pair Corralation between Air Lease and Catheter Precision

Allowing for the 90-day total investment horizon Air Lease is expected to under-perform the Catheter Precision. But the stock apears to be less risky and, when comparing its historical volatility, Air Lease is 4.21 times less risky than Catheter Precision. The stock trades about -0.16 of its potential returns per unit of risk. The Catheter Precision is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  42.00  in Catheter Precision on October 26, 2024 and sell it today you would earn a total of  0.00  from holding Catheter Precision or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Air Lease  vs.  Catheter Precision

Air Lease

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile essential indicators, Air Lease may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Catheter Precision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catheter Precision has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Air Lease and Catheter Precision

The main advantage of trading using opposite Air Lease and Catheter Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, Catheter Precision can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Catheter Precision will offset losses from the drop in Catheter Precision's long position.

The idea behind Air Lease and Catheter Precision pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.